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Chapter 1.2 (Sole Trader (Disadvantages:
unlimited liability
difficult…
Chapter 1.2
Sole Trader
Disadvantages:
- unlimited liability
- difficult to raise additional capital
Definition :-
- a business in which one person provides the permanent finance and in return has full control of the business
Advantage:
- Easy to set up
- No legal formalities
- Owner keeps all profits
Partnership
Advantages:
- Partners may specialise in different areas of business
- share decision making
Disadvantages:
- profits are shared
- unlimited liabilities for all partners
Definition:
- Business frm by 2 or more people to carry on a business together, with shared capital, investment and often responsibilities.
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Private sector:-
- comprises business controlled by individuals or group of individual
Public sector :-
- comprises organisation controlled by central or local government
Public Sector Enterprise
Advantages:
- managed with social objectives rather than solely with profit objective
Disadvantages:
- Tendency toward inefficiency due to lack of strict profits target
- Subsidies by the government may encourage inefficiency
Private limited company
Advantages:
- Shareholders have limited liability
- Separate legal personality
Disadvantages:
- legal formalities involved
- Quite difficult for shareholders to sell share
Public limited company
Advantages:
- Limited liabilities
- Separate legal identity
Disadvantages:
- Directors influnced by short-term obejctives of major investors
- Legal formalities information (Need to send financial report to government and shared with public)
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Charities
Objectives:
- Prevention of relief poverty
- advancement of education
- advancement of religion
- advancement of health or the saving of life
- advancement of animal welfare
Charities often perform useful social and environmental functions that would not be undertaken by private business or government funded organisation.
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